Federal Budget 2025-26: Superannuation and retirement insights 

• The 2025–26 Budget did not introduce new superannuation measures, but key proposals like Payday Super, the $3 million super tax, and financial advice reforms remain in progress.
• Additional funding to the ATO to aid timely payment of tax including an estimated $31.0 million in unpaid superannuation to be disbursed to employees.
• Broader reforms continue to focus on improving access to financial advice, expanding retirement income options, and enforcing service standards.

The 2025-26 Federal Budget did not announce any new initiatives directly affecting the superannuation and retirement system in Australia. Perhaps one reason for this is that the government already has several proposals in the works aimed at changing certain aspects of superannuation.

The following is a review and stocktake of these initiatives, the progress of which, for some of these measures, will depend on the outcome of the forthcoming election and composition of the new Parliament. This is particularly the case for those measures, where enabling legislation is still required to be passed or the Coalition has indicated it may take a differing position if elected to form government.

A major reform to superannuation announced in the 2023 Budget, Payday Super, is set to commence on 1 July 2026, mandating that employers pay superannuation contributions within seven days of salary payments, instead of the current quarterly requirement. While broadly accepted, including by the Coalition, the reform’s timing may be subject to review as the enabling legislation is yet to be passed.

Treasury has just released exposure draft legislation and guidance, with consultation open until early April 2025. The proposed changes increase compliance obligations for employers, requiring updates to Single Touch Payroll (STP) reporting and SuperStream payment standards. Employers will need to report both Ordinary Time Earnings (OTE) and Superannuation Guarantee (SG) liabilities, with potential changes to OTE definitions under review.

Other significant implications include:

• Increased penalties for late payments, including revised SG charge calculations.
• Closure of the Small Business Super Clearing House from 1 July 2026.
• Revisions to the choice of fund rules, allowing employers to provide employees with their existing stapled fund details during onboarding.

The 2025-26 Budget did include complementary, additional funding to the ATO of $50.0 million over three years from 1 July 2026 to extend the Tax Integrity Program, including for employer – i.e. SG - payments. This will enable the ATO to continue its engagement program to ensure timely payment of tax and superannuation liabilities by medium and large businesses. This measure is estimated to increase receipts by $3.2 billion over five years from 2024-25, and increase payments by $1.4 billion, including $31.0 million in unpaid superannuation to be disbursed to employees.

The proposed additional tax on super balances over $3 million, originally planned for 1 July 2025, remains stalled in the Senate in the current Parliament. If Labor is re-elected, the enabling legislation may be re-introduced; amended or abandoned. The Coalition has pledged to scrap the tax if it wins government.

Key features of the current proposal include:

• No indexation of the $3 million level from which the tax applies - meaning more individuals would be affected over time.
• Tax applies to certain unrealised gains, creating administrative complexities.
• Challenges for implementing in respect of defined benefit interests and members in Defined Benefit schemes, where the administrative burden of the new measures may not be entirely passed onto the ATO.

Financial advice is an important part of commencing retirement for many Australians. The Government has recently released its second tranche of financial advice reforms in response to the 2022 Quality of Advice Review.

The draft legislation covers measures that include:

• Replacement of Statements of Advice (SOAs) with simpler, format-independent Client Advice Records (CARs).
• The power for financial advisers employed by superannuation funds to provide advice on a wider range of topics;
• Empowering superannuation funds to provide ‘targeted prompts’ to members, to assist them in making decisions about what to do with their super without needing the services of a financial adviser.

However, several issues previously intended for this round of reforms, while noted as “still to come” were absent from the exposure drafts for consultation, including:

• A new class of adviser focusing on simpler advice issues, with possible restrictions on the topics of advice that they can address and fees they can charge.
• A revised Best Interests duty, used to judge the appropriateness of advice.
• The removal of the ‘Safe Harbour’ process.

If there is a change of government at the next election, they may also determine their own priority list for financial advice reform.

The Government has committed to introducing mandatory and enforceable service standards for APRA-regulated superannuation funds to improve member engagement.

The initial focus areas include:

• Timely and compassionate handling of death benefits.
• Fair and efficient processing of insurance claims.
• Clear, respectful, and accessible communication with members.

Treasury will release draft standards/legislation for public consultation, with consumer advocacy groups, regulators, and industry stakeholders involved in the review process. 

APRA has proposed significant updates to governance standards for superannuation funds, banks, and insurers. The key proposals include:

• Stronger fit and proper requirements for board members and key service providers
• A lifetime tenure limit of 10 years for non-executive directors.
• Mandatory succession planning and conflicts of interest management.
• Enhanced board independence requirements for entities that are part of corporate groups.

APRA will conduct formal consultation in early 2026, with the updated governance framework expected to be implemented in 2028.

APRA will begin public consultation in Q2 2025 on proposed capital requirement changes for annuity providers. The proposed adjustments aim to:

• Reduce capital requirements for life insurers issuing annuities, provided risk controls are in place.
• Encourage greater availability of retirement income products, supporting retirees in securing stable income streams.

APRA’s consultation is welcomed in this area, aligning with its broader objective of expanding retirement product offerings and ensuring capital efficiency in life insurance markets.

From 1 July 2025, the general Transfer Balance Cap (TBC) will increase from $1.9 million to $2 million, affecting:

• Non-concessional contribution limits and bring-forward arrangements.
• Eligibility for superannuation tax offsets and government co-contributions.

Individuals who start a pension for the first time from 1 July 2025 will have a personal TBC of $2 million. The defined benefit income cap will also increase to $125,000 for the 2025–26 financial year. 

The introduction of mandatory CRFD requirements in financial accounts for major corporates (from 1 January 2025) and registrable superannuation entities and responsible entities (from 1 July 2026) has been legislated, and accompanying accounting standards updated.  It is noteworthy that the Coalition has signaled a potential rollback of the CRFD requirements.  Any change to these measures would require amendment of the current legislation by the incoming Government. 

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